In the second post of a three-part series exploring the changing asset allocation among Canadian institutional investors, I examined the changing needs of pension plans as a result of demographic shifts and increased emphasis placed on short-term relative to long-term investment performance. In this final post, I will discuss how alternatives can help to address […]
This is the second post in a three-part series about the shift among Canadian institutional investors away from the traditional 60/40 asset mix and into alternative investments. In the first post, we examined several recent trends in asset allocation and what they mean for asset managers. In this post, we look at some of the […]
Over the past 15 years, we’ve seen Canadian institutional investors shift away from the traditional, familiar and comfortable asset mix consisting of only equities and fixed income, and increase their alternative allocations. This post, the first in a three-part series exploring this shift, will examine specific trends in asset allocation and the implications for asset managers. […]
In the first article of this series, I considered a pension plan’s total fund liquidity needs. The second article looked at the use of a liquidity buffer for managing the liquidity risk of an open fund invested in a non-tradable asset class (the buffer method). This article will look at using the queue method for managing the liquidity risk of an open fund.
In a previous post, I examined how to assess the liquidity requirements of a pension fund at the total fund level. In this post and the next one, I’ll explore two different methods for managing the liquidity risk of a fund of direct (less liquid) investments.
Liquidity risk is one of the major risks faced by financial entities (such as banks, insurance companies and pension funds) and one of the primary causes of the 2008 financial crisis. Yet many entities with financial exposure cannot quantify the liquidity risks to which they are exposed.
For an investor with a primary objective of meeting future liabilities, it’s useful to build a framework for investing assets to meet those future liabilities. The first step in exploring such a framework requires an understanding of the nature of the liabilities and what economic factors can be deemed to impact the future liability cash flows.
The performance of interest-sensitive equities can be significantly impacted by the direction and level of interest rates, among other factors such as industry conditions, profitability, etc.
In my previous article, I discussed the role equities play in portfolio allocation. If you invest in equity portfolios with return and risk characteristics that differ significantly from the assumptions in the asset allocation, you may be undermining the entire asset allocation process. In this article, I’ll look at whether the equity portfolio accomplishes its expressed goal in the asset allocation process.
Recent fluctuations in interest rates have impacted equity markets. As a result, it’s useful for asset allocators to examine their equity portfolios to determine whether they have the “right” equity exposure.